Looking ahead, Yahoo projected adjusted revenue of $1.18 billion to $1.22 billion in the fourth quarter, which is a bit below estimates on Wall Street for $1.25 billion. Management sees adjusted EBITDA of $400 million to $420 million, which compares poorly with the Street’s view of $491.7 million.

Yahoo also dimmed its full-year forecast, calling for adjusted revenue of $4.40 billion to $4.45 billion, compared with $4.45 billion to $4.55 billion previously. The company now sees adjusted EBITDA of $1.48 billion to $1.50 billion, down from $1.55 billion to $1.65 billion.

Yahoo also announced a new agreement with Alibaba that lowers the maximum number of shares Yahoo is required to sell in the Chinese e-commerce company’s initial public offering to 208 million from 261.5 million.

"Under its new leadership, Yahoo has made it a priority to build a good relationship with Alibaba," Joe Tsai, executive vice chairman and board member of Alibaba said in a separate statement, "We look forward to working with Yahoo as a supportive shareholder and partner to expand our business for future growth."

Yahoo noted it has more than 800 million monthly users, up 20% over the past 15 months.